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Last Updated: 20 March 2024

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A World Trade Organization (WTO) panel ruled earlier this month on a complaint brought by Malaysia against the European Union over the bloc's plans to phase out the import of palm oil as biofuel because of environmental concerns.

Malaysia, the world's second largest producer of palm oil after Indonesia, brought a case to the WTO in early 2021 against the EU, France and Lithuania.

The Southeast Asian country contested that the EU had violated international trade rules in its policy to phase-out the import of palm oil as a biofuel due to deforestation and emissions risks under the EU's second Renewable Energy Directive (RED II).

Indonesia also filed a case with the WTO but asked for it to be suspended a day before the result of Malaysia's case was announced.

What was the WTO decision based on?

The three-person panel voted by two-to-one in favor of the EU's ability make rules against imports of crop-based fuels for environmental reasons.

However, it also said that the EU was at fault for how it had prepared and published its policy, which amounted to "arbitrary or unjustifiable discrimination" against Malaysia.

Much of this revolved around how the EU defined its assessment of emissions, along with indirect land use change (ILUC), which measures the impact of diverting agricultural land previously designed for food production to biofuel production,

The WTO panel found the EU's study on the ILUC risk of palm oil, using data from 2008 and 2016, was potentially outdated.

It also said an arbitrary choice was made to assess emissions from palm oil production over a 10-year period, when palm trees usually survive for up to 30 years.

"There are deficiencies in the design and implementation of the low ILUC-risk criteria," the WTO panel noted in a 348-page report published on March 5.

EU relations with Malaysia, Indonesia at risk

One dissenting panelist also offered greater support to Malaysia's appeal that the EU policy is protectionist, since it is accused of singling out palm oil while overlooking the environmental impact of biofuels produced within Europe, such as rapeseed.

Chris Humphrey, executive director of the EU-ASEAN Business Council, said that the WTO ruling will be "viewed by both the EU and Malaysia as a victory given the mixed outcome."

"While we await the delayed WTO ruling on Indonesia's complaint on palm oil, it is clear that dialogue between the EU and these key ASEAN partners is the only way forward in dealing with the concerns that both Indonesia and Malaysia have," he added.

The EU Directorate-General for Trade said in a statement that the bloc "intends to take the necessary steps to adjust the Delegated Act."

The European Commission did not respond to requests for comment.

Daniel Caspaty, an MEP and chair of the European Parliament's committee on relations with ASEAN states, told DW that the WTO panel's findings "marks a significant moment in the debate on trade policy and environmental protection."

"This decision will undoubtedly have implications for the EU's relations with Indonesia and Malaysia, particularly concerning the palm oil dispute," he added. 

Caspaty said Europe must urgently find a resolution, as well as with other conflicts such as discussions surrounding nickel.

Reactions to WTO verdict

Malaysia's government responded to the WTO verdict as though it had emerged victorious.

Abdul Ghani, Malaysia's minister of plantation and commodities, called it a "vindication" of Kuala Lumpur's "pursuit of justice" for its palm oil sector.

Speaking to local media, he argued that the WTO ruling "clearly finds fault with the EU's rules on indirect land use change to ban palm oil biofuels," adding that it "also finds fault with the EU's approach to notifying and consulting with other economies when introducing new trade measures."

Indonesian policymakers, meanwhile, will take "cold comfort from headlines celebrating the ruling about discrimination," said Jakarta-based analyst Kevin O'Rourke from the consultancy Reformasi Information Services.

It remains to be seen whether Indonesia's president-elect, Prabowo Subianto, will alter Jakarta's stance around this issue when he enters office later this year.

Humphrey from the EU-ASEAN Business Council said he now hopes "the ruling draws a line under the dispute," and that the EU, Malaysia and Indonesia can now focus on working out their differences through the ad-hoc joint task force setup last year.

The task force last met in February and is expected to reconvene for more talks in September in Brussels.

EU should set 'realistic' standards for other countries

The EU is nearing the end of free-trade talks with Indonesia and has been in talks with Malaysia about restarting negotiations for a bilateral free-trade pact.

However, Brussels has recently come under attack from more third parties over how it classifies its rules related to deforestation.

For Jakarta-based analyst O'Rourke, greater clarity can benefit Indonesia and Malaysia.

"Unlike some of their competitors, the two nations are able to achieve compliance in many instances and that will constitute a form of competitive advantage over the long term. And, of course, without such rules, climate change will imperil these as well as all other countries," he said. 

This is likely to require the EU to alter how it approaches trade with partners.

Frederick Kliem, a research fellow and lecturer at the S. Rajaratnam School of International Studies in Singapore, said Brussels currently applies "a very detailed, highly bureaucratic approach to such matters."

"This is OK internally, where the EU is well understood, appreciated and policies are well communicated. This is, however, not the same for third parties," he added.

"If the EU does not moderate its high standards and make them more realistic for third parties to achieve, I fear it will be very difficult to achieve further free trade agreements."

https://amp.dw.com/en/eu-palm-oil-ban-malaysia-indonesia-seek-trade-justice/a-68606071

Sumber : Nature and Environment Malaysia

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Last Updated: 13 March 2024

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KUALA LUMPUR, March 12 (Reuters) - Malaysian palm oil futures were largely unchanged on Tuesday as strength in Dalian edible oils wasoffset by a firmer ringgit and weak Chinese demand.

The benchmark palm oil contract FCPOc3 for May delivery on the Bursa Malaysia Derivatives Exchange closed up 2 ringgit, or 0.05%, to 4,133 ringgit ($884.06).

The contract was seen trading higher on supportive February output data in Malaysia as well as bullish momentum from Dalian vegetable oils futures, said Anilkumar Bagani, research head of Mumbai-based vegetable oils broker Sunvin Group.

"However, the stronger Malaysian ringgit and the absence of buying from key buyer China has capped the pace of the upside momentum in palm oil," Bagani said.

Dalian's most-active soyoil contract DBYcv1 rose 0.92%, while its palm oil contract DCPcv1 gained 1.08%. Soyoil prices on the Chicago Board of Trade BOcv1 were down 0.58%.

Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.

Malaysia's palm oil stocks at the end of February dwindled to their lowest levels in seven months as production hit a 10-month low, offsetting the slowdown in exports.

Inventories at the end of February fell 5% from January to 1.92 million metric tons, crude palm oil production declined 10.18% to 1.26 million tons, while exports plunged 24.75%, data from industry regulator the Malaysian Palm Oil Board showed.

The Malaysian ringgit MYR=, palm's currency of trade, rose 0.13% against the dollar, making the commodity more expensive for buyers holding the foreign currency.

Exports of Malaysian palm oil products for March 1-10 rose 6.8% from the same period a month ago, cargo surveyor Intertek Testing Services said.

Another cargo surveyor, AmSpec Agri Malaysia, said exports during the same period rose 6.2% from a month ago.

($1 = 4.6750 ringgit)

https://www.nasdaq.com/articles/vegoils-palm-closes-almost-flat-as-firmer-ringgit-offsets-stronger-dalian-rival-oils

Sumber : Nasdaq

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Last Updated: 12 March 2024

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Our palm oil is poised to remain a key contributor to the nation's economy this year.

We anticipate an increase in export revenue from palm oil and palm-based products.

The rise in revenue is expected due to higher demand from our primary importers, notably

China and India, as well as improved prices of crude palm oil (CPO).

India and China together made up 28.5 per cent of Malaysia's export of palm oil for 2023 and we anticipate this trend to continue this year.

India maintained its position as Malaysia's largest palm oil export market last year for the 10th consecutive year since 2014, with 2.84 million tonnes or 18.8 per cent of Malaysia's total palm oil exports followed by China at 1.47 million tonnes (9.7 per cent). 

Other significant importers were the European Union1.07 million tonnes (7.1 per cent), Kenya 0.92 million tonnes (6.1 per cent), Turkiye 0.88 million tonnes (5.8 per cent), Japan 0.55 million tonnes (3.6 per cent) and Pakistan 0.50 million tonnes (3.3 per cent).

These seven main markets contributed 8.23 million tonnes or 54.4 per cent of Malaysia's total palm oil exports in 2023.

Malaysia exported 24.49 million tonnes of palm oil and palm-based products and generated an income of RM94.95 billion for 2023. In 2024, export revenue of palm oil and palm-based products is expected at RM110 billion. 

Similarly, palm oil exports may increase by 3.3 per centto 15.6 million tonnes for 2024, as opposed to 15.1 million tonnes for 2023 attributed to expected higher export demand, especially from China.

Besides, the B35 implementation (35 per cent palm oil blend in biodiesel)in Indonesia and the high crude oil price are expected to increase export demand for Malaysian palm oil.

 On the other hand, we foresee the price of CPO to average higher at between RM3,900 per tonne and RM4,200 per tonne this year compared to the RM3,809.50 per tonne which will support our income from palm oil exports.

The expected higher average price of CPO may be mainly due to the tight palm oil supply as a result of unfavourable weather conditions which are expected to remain at least until April 2024. Malaysia's palm oil stocks, expected to be below two million tonnes this year will also support the price of CPO.

We foresee production of palm oil to be higher this year due to improving labour condition in the plantations which will be another contributor to the export income. We are now recording better production of CPO although the numbers are still below the actual production potential level.

In 2023, CPO production recorded an increase for the second year in a row to 18.55 million tonnes compared to 18.45 million tonnes in 2022 and 18.12 million tonnes in 2021.

The higher CPO production of 0.5 per cent in 2023 was partly contributed by the improved estate's yield performance of fresh fruit bunches (FFB) during the year, up by 1.9 per cent to 15.79 tonnes per hectare compared to 15.49 tonnes per hectare in the previous year. 

In 2024, CPO production is expected to increase marginally by 1.1 per cent to 18.75 million tonnes from 2023's production due to an improvement in the labour situation and increased fertiliser application.

However, CPO production is expected to remain below potential due to the El Nino event, which is expected to affect FFB production in the second half of this year.

To expand our export market, MPOB has successfullyproduced high value palm-based products in the market, especially red palm oil, which is rich in various natural health-promoting antioxidants including vitamin E, carotene, phytosterols, squalene and coenzyme Q10.MPOB has developed and introduced value-added products utilising red palm oil, including cookies, ice cream, and various other products. 

MPOB's research in the food and nutrition field has expanded the range of palm oil applications, leading to the development of new products that enhance export diversification. These include palm-based coconut milk and palm-based cheese. 

Our research efforts have resulted in the successful development of tocotrienol and nano-tocotrienol from palm oil, which are known for their health benefits. These products have garnered significant demand from our export markets, reflecting their positive reception among consumers. 

https://www.nst.com.my/business/insight/2024/03/1023959/higher-export-revenue-%C2%A0oil-palm-sector-year

Sumber : New Straits Times

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Last Updated: 12 March 2024

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KUALA LUMPUR (March 11): Maybank Investment Bank (Maybank IB) maintained its 'neutral' rating for the plantation sector, and said the sector had played its part in ensuring food security, job security, and health security not just for the nation, but the world over during the Covid-19 pandemic.

In a sector update on Monday, the research house said despite rising cost challenges and falling output, the sector still made huge monetary contributions of more than RM23 billion over the past four years in various forms of direct and indirect taxes, and contributions.

Maybank IB said that between 2020 and 2023, the plantation sector contributed approximately RM6.1 billion in windfall profit levy, RM3.7 billion in export duties, RM1.3 billion in Malaysian Palm Oil Boar cess, RM200 million in prosperity taxes, more than RM6 billion in Sabah and Sarawak sales taxes (Maybank IB’s back-of-the-envelope estimates), and easily more than RM6 billion in corporate income taxes and individual taxes (by the smallholders) to the Malaysian government for a selected list of corporates.

“The sector is said to be among the highest tax contributors in terms of total taxes (including the windfall profit levy, export duties, Cess, and Sabah and Sarawak sales taxes, in addition to corporate taxes),” it said.

Maybank IB said palm oil holds more than 50% market share in the global vegetable oils trade.

Hence, the research house said its continuous availability is crucial to global food security as well as health security.

It said throughout the pandemic, palm oil exports never stopped, as the government allowed palm oil cultivation to proceed.

“Besides food use, the continuous availability of palm oil and palm products also meant there were the much-needed ingredients to make personal cares and cleaning products, such as hand wash, soap, laundry detergents, hand sanitisers, etc, which the world desperately needed in its fight against the highly infectious Covid-19 virus,” it said.

Maybank IB highlighted that during the pandemic, the plantation sector was among the few granted special approval by the government to operate.

It said social distancing at the workplace was inherent in the estates, given that one worker typically covers more than 10 hectares of estates, providing a naturally safe working environment.

The research house said that at the height of the pandemic, outsiders had limited access to the staffs’ housing quarters and estate operations to ensure the safety of their workers and families.

“While country borders were mostly closed initially, guest workers remained employed throughout, and were paid decent wages (plus incentives) that allowed them to repatriate the much-needed income to provide for their families back home (presumably equally affected by the pandemic),” it said.

https://theedgemalaysia.com/node/704123

Sumber : The Edge Malaysia